DoorDash (NASDAQ:DASH) stock slid 1.6% on Thursday and Uber (NYSE:UBER) shares traded lower after Grubhub announced it will eliminate delivery and service fees on restaurant orders that exceed $50. The change is being introduced to select users on Thursday and will expand more widely on February 2.
Previously, fee exemptions for larger orders were restricted to customers subscribed to Grubhub’s paid membership service. The company’s chief executive, Howard Migdal, described the decision as a strategic effort to draw in new customers and to encourage larger basket sizes, calling the fee burden the "biggest pain point" in the food delivery industry.
Migdal highlighted the scale of the fees consumers face, saying the average fee for orders over $50 across delivery platforms sits at about $13. He also noted that 81% of Grubhub’s customers have abandoned their carts at some point after seeing the total cost once fees were applied. "Quite frankly, as a consumer, you feel guilty paying those exorbitant fees to take something from point A to point B," Migdal said.
The broader rollout and price change from the now-private Grubhub is being watched closely by investors reacting to potential market-share shifts and the prospect of fee compression across the food-delivery sector. Publicly traded competitors saw immediate market responses, with DoorDash registering a measurable decline and Uber trading lower amid investor reassessment.
Market participants are parsing the move for its implications on order frequency, average transaction size and the competitive pricing dynamic between private and public delivery platforms. Grubhub’s management framed the policy change as a way to address consumer resistance to added fees and to stimulate larger transactions through the platform.
Context and next steps
The fee removal will begin with a limited user test before becoming broadly available on February 2. Until the broader rollout, the change will initially affect only a subset of users identified by the company.
Investors and analysts will likely monitor customer behavior metrics, such as cart abandonment and average order size, and the subsequent reactions from competing platforms as the rollout progresses.